GM Auditors: 'Substantial Doubt' About Viability
GM’s accounting firm is uncertain that the ailing American automaker – already running on fumes in the form of federal loans – can maintain its “going concern” status.
GM’s accounting firm conducted an independent audit, and in a filing with the U.S. Securities & Exchange Commission, it said that “our recurring losses from operations, stockholders’ deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern.”
The GM filing also disclosed that the Treasury has agreed to waive some of the requirements attached to GM’s federal loans, including that it come to an agreement with creditors to convert two-thirds of its debt to equity.
Despite aid from the federal government, GM’s filing with the SEC may cause problems with suppliers and banks, which will undoubtedly lose more confidence in the possibility of the automaker’s survival.